Global gold prices edge down on low demand

Bengaluru, Jan. 25 -- Gold drifted down on Wednesday as Chinese demand ebbed ahead of the Lunar New Year festival, with some analysts warning of further declines as prices for the metal could be due a technical correction.
That came after bullion touched two-month highs earlier in the week, buoyed by a weaker dollar and uncertainty over the policies of US President Donald Trump.
Spot gold had fallen 0.5% to $1,202.90 per ounce by 11.47 am. US gold futures shed 0.7% to $1,202.90.
"(Gold was) unable to capitalise on a softer dollar with Chinese physical demand beginning to wane as we head ever closer to the New Year holiday period," MKS PAMP Group trader Sam Laughlin said in a note.
The dollar index, which measures the greenback against a basket of currencies, fell 0.1% to 100.270.
Spot gold is due for a deep correction, following its failure to break strong resistance at $1,219 per ounce, said Reuters technical analyst Wang Tao.
"Gold prices have moved higher since the beginning of the year and need some technical correction in the very short-term," said Jiang Shu, chief analyst at Shandong Gold Group. "Gold might test levels of $1,185 during the (Lunar New Year) period."
The metal has rallied about 8% since mid-December, fuelled by worries over Trump's policies. Gold is often seen as a safe-haven investment in times of geopolitical and financial uncertainty.
On Monday, Trump formally withdrew from the Trans-Pacific Partnership trade deal and told US manufacturing executives he would impose a hefty border tax on firms that import products after moving American factories overseas.
Meanwhile, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.37 percent to 804.11 tonnes on Tuesday from 807.07 tonnes on Monday. Silver dropped 0.8% to $16.95 on Wednesday. Platinum fell 1% to $987.75, after hitting its highest since 10 November the session before.
Palladium inched up 0.2% to $784.72. It marked its strongest in more than one and one-and-half years the day before.